The Independent Investor: Dementia & Your portfolio

As more Baby Boomers reach retirement age, few elderly investors are willing to discuss a growing risk to their portfolio. The onset of diminished mental capacity can cause huge losses in your life savings. Many only realize the problem in hindsight. Don't let that happen to you.

The facts are concerning. For example, one in nine people, age 65 or older, suffer from some form of dementia. That skyrockets to one in two people over the age of 85. What's worse, there are at least 18 different diseases that bring on dementia. Alzheimer's disease is only the most prevalent of causes. No one can predict who will get this disease, but we do know that the older we get the higher the risk.

If you have been reading my columns on estate planning, you know by now that a visit to an estate planning attorney is in order. It is true that most investors with significant assets have already made wills, set up trusts and in other ways made plans to protect their money after death. In many cases, they have also set up a power of attorney to manage their affairs in the event of illness or when they can no longer manage their money themselves.

The problem with all of the above is that none of it safeguards you against an early onset of dementia. Only you can detect it, but even then, your mind can be telling you something different and usually does. It is a serious problem, since one out of seven us have it and may not know it. For investors, especially self-directed investors, this can result in disastrous investment decisions.

But what about your loved ones, won't they know? Unfortunately, unless you have actually lived through this process with a relative or friend, chances are they won't recognize what is occurring unless you tell them. I have had clients who have managed to conceal how poorly they are functioning from those they live with while continuing to make increasingly poor investment decisions as their brains atrophy.

My experiences with my own mother have taught me just how insidious this process can be. Our family assumed that dementia could be identified by the amount of things my Mom forgot, but we were wrong. There are many ways dementia can manifest itself and loss of memory is only one of them. In vascular dementia, for example, where the victim experiences a series of micro-strokes, other more important issues start to impact the brain. Loss of judgment, impulse control and emotional imbalance are several other conditions that can crop up even before memory loss.

All of the above can have a devastating impact on your portfolio. In some cases, an investor with early onset dementia can experience excessive fear or rage. Although prudent all their life, some investors will begin to take on excessive risk with their portfolios. Others will panic at the first down period in the markets and sell everything. Some lose their hard-won skepticism and will trust perfect strangers with easy-money con games.

Unfortunately, most loved ones realize that something is wrong only after the fact. It is far easier to suspect dementia when someone cannot find their way home. But it is far more difficult to identify within the financial world, especially if you have been making investment decisions on your own for many years.

How can you protect yourself from this risk? First, monitor your own investment behavior. If you detect that there have been recent shifts (either more greed or fear) in how you approach the markets - be on guard. Make sure you talk to your loved ones concerning these changes and ask them to keep an eye on your behavior. If they admit that they do see a change, don't get angry, get help. Go to your doctor and admit your fears. Better to lose a little pride than half of your life-savings.

On a different note, I will be missing in action over the next few weeks, getting my left knee replaced. Look for me again in November.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

The Independent Investor: The Impact of One Bad Apple

For years, the mantra of Corporate America has been that they are drowning in government rules and regulations. Small business has echoed that refrain, as has Wall Street. The problem is that these same entities continually shoot themselves in the foot.

Over the last two weeks, thanks to Wells Fargo in the banking sector, and Mylan Labs in pharmaceuticals, Corporate America has once again reminded us of that business just can't be trusted. In the case of Wells Fargo, over 2 million fictitious customer accounts were opened over several years in order to meet sales goals.

Critics say Mylan Labs' 500 percent increase (since 2007) in the cost of a device called EpiPen that treats severe allergic reactions is simply another case of rampant greed within the drug industry. They are not alone. Gilead Sciences and Valeant Pharmaceuticals have both been caught instituting similar price hikes on some of their drugs. And who can forget Martin Shkreli, the former head of Turing pharmaceuticals, who jacked up the price of a life-saving drug, Daraprim, from $13.50 to $750 per tablet (while giving the finger to all of us on tape).

Not only has the public reacted with anger over these incidents, but it has kept the idea alive that existing rules and regulations are justified. What's worse is that many politicians will use these events to pile even more restrictions on the nation's corporations.

Hell hath no fury compared to a politician with a meaty issue in an election year. Senators from both parties jostled for air time on Tuesday during a hearing over Wells Fargo's indiscretions. To say that Wells' chief executive officer was trashed up one side and down the other would be an understatement.

CEO John Stumpf, once the "pretty boy" of the financial industry, due to his company's relatively clean bill of health during the financial crisis, was vilified for going easy on the bank's leadership while firing thousands of lower-level workers. Legislatures used terms like "gutless leadership", "fraud" and "out of touch" executives to decry management's response to the scandal.

Next week, it is Mylan Lab's turn to testify before the House Oversight and Government Reform Committee. Heather Bresch, the CEO of the massive pharmaceutical company, will be on the hot seat. Politicians running for re-election will be vying for the microphone. Expect to hear how she and her company are guilty of price gouging among other charges.

While the hearings and their aftermath might provide entertaining reading, the consequences of these cases of corporate greed may have far-reaching effects on all of our industries. There is a great deal of truth in the complaints of many businessmen, especially small businessmen, that Federal, state and local regulations are making it almost impossible to run a profitable business, but at the same time, one bad apple after another pops up justifying the chains that bind the entire cart.

After the 2009 financial crisis, a flood of new regulations and reforms swamped the banking industry. The Dodd-Frank Wall Street Reform and Consumer Protection Act were signed into law in 2010. Among other things, it created yet another agency: the Consumer Financial Protection Bureau.

The Federal Reserve was given more power as were a slew of other governmental agencies. Lending practices, reserve requirements, trading restrictions and countless more new regulations were foisted on the banking industry. The idea behind this avalanche of rules and regulations were to ensure that "never again" will Americans be subjected to these "too big to fail" bailouts.

Hillary Clinton has already promised to deal with these outrageous pricing issues in the drug sector. As such, does anyone want to guess the chances of reducing regulations on either the pharmaceutical or banking industry? As long as industry continues to shoot itself in the foot, what else can one expect?

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

The Independent Investor: Woman Need to Invest More

We all know women generally make less than men. On average, female workers make 77 cents for every dollar a man earns doing the same job. If you are a woman of color, or work in some lower paid industries, the gap could be even wider. It is one of the reasons women need to invest and save more, not less.

That may sound counter-intuitive. After all, if you are making less, you have less to save and invest. You are absolutely right, but there are important reasons that you still need to save more. One of the main reasons is that the chances are you will live longer than your male counterparts by about five years.

That means if you are living on $50,000 a year, you will need $250,000 (five years times $50,000) in additional income and assets simply to stay afloat until you die. And guess how much the gender wage cap will cost you over your career? The Women's Institute for a Secure Retirement figures that over your lifetime the wage gap will cost you $300,000. Do you see where I'm going here?

The numbers don't add up. Over 150 psychological studies have shown that most women are great at saving, but saving alone won't save you. The only way I believe women can overcome the wage gap penalty, while living longer, is through investing. But unfortunately, the same studies reveal that women are generally more risk-adverse than men when it comes to investing.

There are several reasons for that: everything from lack of confidence to the fear of becoming a homeless bag lady in their old age. The net result of this aversion to risk is less reward. And therefore less money to live on when you retire, get divorced, or experience the death of your husband.

And yet, study after study reveals that when women do invest, they do it well and, in most cases, outperform their male counterparts by almost 1 percent per year. I can attest to that since well over half of my clients are women. One of the main reasons is that my female clients trade less than male clients. Frequent trading usually ends up with less, not greater, rewards over time.

For the most part, my female clients contribute to their tax-deferred savings plans on a far more regular basis than males. They also refrain from second-guessing their advisors as well. Given that they are usually paying a fee to have their investments managed, their "hands-off" attitude allows the professional to do their jobs. Many men, on the other hand, are like back-seat drivers, always tinkering with their portfolios usually at the wrong time and with the wrong investment.

Probably, their best investment trait is the ability and willingness to ask for help. And when they get advice that makes sense to them, they stay the course, despite the ups and downs which are always present in financial markets. When you combine all of the above, it is not difficult to understand why women investors outperform men.

The bottom line for women is that despite the wage, age and gender gap, you owe it to yourself to start investing and do it now. The longer you wait, the more difficult it will become to avoid that bag lady fate that haunts your dreams.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

The Independent Investor: The VA — If It Isn't Broke, Don't Fix It

In the heat of presidential campaign rhetoric, the quality of care given to our veterans has become a popular topic. Needless to say, neither candidate has received care in a veteran's hospital and probably does not know anyone who has.

Actually, few of us know anything at all about the Department of Veterans Affairs medical capabilities. Most Americans have never served in the military. Fewer still have ever been inside a VA facility, and if they have, it was to see a relative or friend.

As such, our ignorance breeds a whole host of misunderstandings about how good or bad our veterans are being treated. Critics are quick to point to the 2014 scandal when some VA facilities were found to be denying care to service members and covering up those failures as well. But is that scandal enough to completely revamp an organization that has been serving our countrymen through countless wars?

As a vet who has experienced VA medical treatment, I can tell you that I found my treatment both professional and given with a high degree of care. There are plenty of other veterans who have had the same experience. But don't take my word for it.

There are at least 60 recent studies (since 2014) done by a variety of medical and other organizations. The results indicate that the care our vets receive at VA facilities is comparable to (or superior to) that offered by private providers. In areas such as mental health, preventative care, outpatient processes and outcomes, VA treatment was superior to that received in the private sector, according to these studies.

Their goal, which is centered on the well-being and health of each veteran, explains why their track record is better than average. Take my case as an example. I was wounded in Vietnam as a teenager. I am now in my late 60s and the VA has had a record of my health and well-being for practically my entire adult life. They know me from top to bottom, inside and out.

For the VA, there has always been a strong incentive to invest in my long-term health. In addition, the specialists work as a team with access to the same records and treatments that I have received over the decades. Therefore, there is little redundant treatment and my care is not fragmented among various doctors, hospitals etc., as it can be in the private sector.

The VA's motives are to keep me healthy and living longer and that gives me a warm, fuzzy feeling. In the private sector, profit dictates what happens to the patient. Those who favor privatization of the Veteran Affairs' medical system can swear that won't happen, but ask me if I believe them? And who says they can run the VA any better? If I look at the performance of the prison system, where privatization has been the buzz word for years, I am not impressed nor convinced they do a better job than the state.

Dr. Joseph Lalka, who worked as a primary-care physician at the VA for five years and is now retired, thinks that privatization would be a big mistake. Even though he recognizes the faults of the system, he believes the vast majority of services fill the veteran's needs. Improvements can always be made and the timing of visits to specialty treatment, in particular, is one obvious area that needs to be upgraded, he says.

Remember also that a lot of vets treated at the VA have combat-related traumas and disabilities. You don't see that often in your run-of-the-mill hospital or medical office. Their treatment costs money and requires expertise born from experience. It is hard for me to believe that the private sector could do a comparable job in this area of medicine. Of course, with trauma comes pain medication and with that the higher chances of developing an addiction. It is a problem that is affecting many Americans, not just Vets. Treatment of drug addiction is another area that could be improved at the VA.

I'm sure there are readers out there who disagree with my stance and I would love to hear from you. In the meantime, fix what needs fixing, but don't jettison a system that has served its veterans well in their time of need.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

The Independent Investor: The VA — Political Football

It is an election year and as such veterans are a voting block that neither side can resist. Both candidates are promising to overhaul Veterans Affairs once elected. The questions are whether to hand it over to the private sector or just try and fix the government organization's short-comings.

We all remember the terrible scandal back in 2014 when a whistle-blower revealed shocking inefficiencies, coverups and the deaths of some veterans within the Veterans Affairs. The then Secretary of Veterans Affairs Eric Shinseki, along with a gaggle of bosses in various states, who were caught falsifying waiting time reports for vets, provided the obligatory resignation parade before the nation.

Hearings were called where "outraged" politicians and veterans rights activists all got their share of free media time and in the end the Choice Act was rushed through Congress. This allowed vets to go to private care providers if they were unable to schedule medical appointments within 30 days or travel distances of at least 40 miles to a VA office. This would theoretically insure that no more vets would die while waiting for treatment.

Critics charged that this was simply the first step toward privatization of the veterans' health care system.

A bi-partisan panel, the Commission on Care (COC), comprised of health care executives and veterans' advocates were charged with looking at the system and coming up with recommendations to "fix" it. Last month that panel issued 18 recommendations that are supposed to "transform this complex system."

If this all sounds like the typical smoke and mirrors remedy to a national problem that we have become accustomed to, then you wouldn't be wrong. First off, the panel recommended an 11-member board of directors that would govern the Veterans Health Administration and report directly to the president. To me that just sounds like adding another layer of bureaucracy on top of an administration chock full of the same.

In addition, a new "community network of care" would allow vets to obtain medical services from both private and federal health-care providers regardless of the distance to or wait times at their nearest VA providers. That would push the system further towards privatization, say its critics. Other suggestions included improving VA leadership, modernizing computer systems, enhancing clinic operations and creating an easy to use VA personnel system.

If all of those suggestions sound well-meaning, but nebulous in the extreme, you are right. If history is any guide, millions (if not billions) will be spent with little visible improvement in veteran's care, accountability will be low to non-existent, and as time passes, the whole effort will dwindle to nothing when the next crisis becomes the nation's priority.

Sorry for my cynicism, and now on to politics.

Few voters realized that the 2014 scandal occurred on Bernie Sanders' watch. He was chairman of the Senate Veterans Affairs Committee and had been so for a year when the scandal erupted. Critics argue that Sanders had been using the veterans' health care system as a model for what a universal health care system in America would look like. Did Sanders' ideological views of how much government could deliver blind him to the VA's obvious (in hindsight) problems and deficiencies?

As politicians will do, Bernie soon turned a losing proposition into a win by taking credit for the Choice Act, even though the legislation opened the door for further privatization of the VA. Not to be outdone, Hillary Clinton, towing the traditional Democrat's party line, wants to build upon the Choice Act and restructure the agency, but falls short of privatizing it.

Republican Donald Trump, as you might expect, jumped into the act. Stating that the Department of Veterans Affairs' health care system is "badly broken," he would move the VA further toward privatization. His campaign spokespeople suggested that it could evolve into more of an insurance provider (like Medicare), than an integrated hospital system as it is now. Other GOP legislatures support at least a partial privatization of vet's affairs.

As a Vietnam vet, there is a lot at stake for me and my fellow veterans. In my next column, I will examine the pros and cons of both positions.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.